EU states urged to push UK into new talks in event of no-deal Brexit

Brussels has warned EU governments not to break ranks or entertain the idea of side deals with Britain should trade talks fail, urging a firm line in order to force the UK back to the negotiation table “as soon as possible” after January 1.

According to a diplomatic note seen by the Financial Times, EU member states were warned by Brussels not to do anything that would ease the consequences of a no-deal end to the Brexit transition period on January 1. 

One EU official familiar with the discussion said Brussels was under “no illusion” that a no-deal Brexit would be highly unpredictable. “Everyone understands there are no guarantees the British come back to the table.”

A second senior EU diplomat said hopes were fading for a deal. “A deal would, of course, be preferable, but it is beginning to look like the question is not whether we can stop the Brexit ship hitting the rocks, but how it can be refloated.”

With negotiators making a last-ditch attempt to secure a breakthrough, UK prime minister Boris Johnson warned on Friday that it was “very, very likely” that Britain would leave the single market without a trade deal. 

Ursula von der Leyen, European Commission president, told EU leaders at a summit in Brussels that there was a “higher probability” that talks would fail than succeed.

Brussels and London will decide on the fate of the talks on Sunday. Despite this, senior EU figures, including the Irish and German foreign ministers, said on Friday that they continued to believe that an agreement was possible. 

But, with time running out, the EU’s working party on the trade negotiations, which is made up of national diplomats, met on Thursday to run through no-deal measures which Brussels had published earlier in the day.

According to the diplomatic note from the meeting, national governments were encouraged to be careful not to expand on unilateral EU “no deal” contingency measures published by the Commission this week. The measures mainly cover temporary arrangements for air and road transport.

A Brussels official told the assembled diplomats that an “incentive must be maintained” for the UK to return to the negotiating table “as soon as possible” if the negotiations did not lead to success this year.

National governments were told it was important not to do anything that would replicate the benefits of EU membership, beyond what was contained in the specific, time-limited measures designed to keep planes flying and trucks moving.

The decision not to include the so-called “fifth freedom” — allowing intra-EU airfreight movements — and to deny “cabotage” rights that would allow British trucks to make drop-offs around Europe were explicitly designed to keep up the pressures, diplomats were told.

With a no-deal outcome looming, the pound fell in choppy trading on Friday. Sterling slipped as much as 1.2 per cent in afternoon dealing, before trimming its losses to about 0.4 per cent to trade at $1.3241. It has shed 1.5 per cent over the past week in its biggest slide since September.

Negotiations between Brussels and London are snarled up primarily over EU demands for a regulatory “level playing field” that would guarantee that its companies be shielded from unfair competition. Mr Johnson has said the demands are an affront to sovereignty.

But leaders including Dutch prime minister Mark Rutte and his Irish counterpart Micheál Martin stressed that both sides needed to strive for an agreement, warning of the economic blow of a no-deal outcome.

“The implications are very serious for all concerned in the event of a no-deal and I think all politicians in the UK and across Europe need to reflect on that,” Mr Martin told reporters at the summit in Brussels.

Mr Rutte said: “It would be unexplainable to the world if the UK and Europe were not able to come to a deal.”

Additional reporting by Jim Pickard in London

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